Apr 27, 2018

This is my friend, Dick.  Dick called about a month ago to talk about mortgages.  He's thinking about buying a home this summer and wants to get an understanding of his price range.  I explained how to get pre-approved and asked him to complete the online application and send me his paperwork.

First Time Buyer for a Mortgage Pre-Approval

Then I didn't hear from Dick for a week.

So I called him.  "Hey, Dick.  Are you still thinking about buying a house?  Still want to know how much you can afford?"

"Sure!" Dick said.  "I'll get to that application ASAP."

Another week passed and still no word from Dick.

Until suddenly, "Hey, Emily.  It's Dick.  The most amazing house just went on the market yesterday!  It's everything I always dreamed of.  I love this house and I want to make an offer.  But my REALTOR® told me there are a lot of people who are interested in the same house.  The listing agent is expecting several other offers so we have to make our offer today.  Can you get me a pre-approval letter?"

"Sure Dick," I explain, "as soon as you get me your application and paperwork."

Now the pressure is on!  Dick is trying to complete the application on his phone at work.  He can't figure out how to send me copies of his pay stubs.  The normal HR person is on vacation.  And I'm fielding questions and processing his application in between the four appointments I already have scheduled for today.  It's chaos.

Don't be like Dick.

If I could give one piece of advice to anyone who thinks there is a remote possibility they might want to buy a house this year, it would be to get pre-approved.  And for heaven's sake, don't procrastinate!

  • Most REALTORS® won't submit an offer to purchase a home without a pre-approval letter.  And the market is extremely competitive right now!  Don't wait until you're ready to submit an offer to get pre-approved.  Then it becomes a stressful, emergency situation for all parties involved.  Have you ever heard the phrase, "Your lack of planning doesn't constitute my emergency"?  Take the easy way out!  Get pre-approved early.
     
  • A pre-approval will tell you how much house you can afford.  I start the conversation with customers with "how much are you comfortable spending for a monthly payment?"  If you tell me $1,800/month, then I can show you how much house you can purchase with the down payment you have available that will meet your budget.  I can also show you the maximum amount for which you can qualify based on your income, assets and debts.
     
  • Pre-approval means you're already half way done with the process.  Once a seller has accepted your offer to purchase a home, you will likely only have 30-45 days to complete the process.  That might seem like a long time, but it goes quickly!  If you've already been pre-approved, you've already provided the bulk of the paperwork necessary for processing your mortgage loan.

Even if you think you have perfect credit, you've had 24 mortgages in the past, and you make a gajillion dollars a year, get pre-approved.  Mortgage lending guidelines are notoriously fickle.  Just because you've had a mortgage before doesn't mean you're guaranteed to get one again!

Additional Resources:

Ask Emily:  What's the difference between a pre-approval and a pre-qualification?

Ask Emily:  When does my pre-approval expire?